Actis acquires stake in Nilgiris Dairy for Rs 300 crore

BANGALORE: Private equity major Actis is snapping up Nilgiris Dairy Farm for Rs 300 crore ($65m). The UK-based private equity (PE) firm has struck a deal for acquiring controlling interests — above 51% — in the 100-year-old South-based supermarket and dairy products business. This marks India’s first major PE led buyout deal. ET had first reported Actis’ move to take at least 51% stake in Nilgiris on July 14.

Sources close to the deal said Actis is partnering NC Venugopal, former managing director of Parrys Confectionary, to lead the management buy-in (MBI). It is learnt that Mr Venugopal will take a small stake as he holds the management reins of the acquired company. Sources said Actis will acquire the Rs 120-crore Nilgiris as a going concern without disturbing the staff operations.

Nilgiris garners nearly 60% of its topline from supermarket business. The other divisions are dairy, bakery and franchise operations covering 30-odd dealers. It must be mentioned that Nilgiris’ expansion plans had come unstuck in recent years with some of the promoter family members mulling exit from a business environment that is turning increasingly competitive.

With the buyout, Actis is expected to take Nilgiris to the next growth phase, which involves a faster roll-out of superstores and dealer network for its dairy products. Sources added that Actis has already prepared an expansion blueprint, which will unfold in the days to come.

Mr Venugopal, an outside specialist, has been associated with Actis in the recent past. He was earlier involved with Actis’ bid to take over Nutrine Confectionery for Rs 270 crore.

Sources said top honchos taking a stake in MBIs and management buyouts (MBOs) is becoming the norm, especially in deals involving PE firms. The exact quantum of Mr Venugopal’s stake could not be ascertained.

Nilgiris Dairy Farms owes its origin to Muthuswamy Mudaliar, a mail runner in Coonoor. Mr Mudaliar took over the butter business of an Englishman in Vannarpet and thus began in part the dairy business of the group. The group has stores in places like Erode, Coimbatore and Chennai, besides Bangalore.